Feb. 6, 2014

Where women-owned businesses thrive: report

Information from 1 million Texas proprietorships proved that some businesses survive longer under female ownership, according to research by Michele Williams, assistant professor of organizational behavior in the ILR School, and Arturs Kalnins, associate professor of strategy at the School of Hotel Administration.

“We find that female-owned businesses consistently out-survive male-owned businesses in many industries and areas,” Williams said. “Our study contributes to the debate about gender and business ownership by going beyond typical questions asked by researchers and policymakers. ... We explore the often-ignored third possibility – that female-owned businesses systematically out-survive male owned-business in specific industrial sectors and regions.”

The study will be published this year in the Journal of Business Venturing and is available at ScienceDirect.com.

Entrepreneurship is considered by many to be a path toward income equality for women. There are 7.8 million women-owned businesses in the United States, according to the most recent U.S. Census Bureau data.

Industrial and geographic contexts make a difference for businesses owned by women, thought Williams and Kalnins, who investigated how that might impact business survival.

Testing their hypothesis on 1 million retail and service businesses, they found that many of the largest industries in which survival rates of female-owned businesses outpaced those owned by men were related to four broad sectors: educational services and dance studios ,clothing, gift giving and alcohol sales and service.

Female-owned businesses outlasted male-owned businesses in a variety of industries, particularly in educational services and dance studios. Four of the largest industries in which survival rates of female-owned businesses outpaced those owned by men were related to clothing, gift giving and alcohol sales and service.

“One of our more surprising findings was that eating establishments that serve alcohol as well as drinking establishments survive longer under female ownership,” said Kalnins. “This goes against some stereotypes that restaurants and pubs are male-dominated businesses.”

In cities with populations of more than 500,000, female-owned businesses lasted longer. Elsewhere, male-owned businesses survived longer, according to the report.

The study has research, practice and public policy implications, Williams said, and recommends flexible research design so that gender differences can be studied in smaller slices, such as industry and geographic categories.

“For 25 years, economywide aggregate studies have not distinguished between different types of industries. These studies often show that male-owned businesses survive longer. New kinds of studies will show that that is only true in certain industries,” Kalnins said.

Further research by locale and industry on business survival of female versus male ownership, Williams said, will help legislators, policymakers and administrators in decision-making related to government-sponsored programs for women business owners.

“We see this study as a first step to better understand the smaller pieces of the economy where women-owned businesses survive longer than their male-owned counterparts,” Williams said.

Determining which of these businesses are also associated with greater profits, larger business size, work-life balance, sustainability and community contributions will help guide policies that inform the future of millions of female-owned businesses, Williams said.

“If we can learn from smaller slices of the economy where women business owners have multiple advantages, we can better understand when and how entrepreneurship truly creates paths toward income equality for women,” she said.

Mary Catt is assistant director of communications for the ILR School. Ashlee McGandy is staff writer for the School of Hotel Administration.